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UK House prices: News & Views


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As a fellow Chartered Surveyor the RICS spokesman for Scotland is a spiv and a talking head.

 

He does not represent my views or all of the Chartered Surveyors that I know carrying out mortgage valuation work.

 

We all know that the housing market is being held up by various means solely to protect the banks. To be fair government intervention has worked worked very well for the last 2-3 years and it has surprised me it has lasted this long. How much further this prop job will last I do not know. But what I can suggest is in my opinion the nationalised banks will soon become the biggest landlords in the country.

 

 

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... But what I can suggest is in my opinion the nationalised banks will soon become the biggest landlords in the country.

This is what banks do: create money out of nothing and end up with real property in the end.

 

"First by inflation, then by deflation..." -- Thomas Jefferson

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Goldfinger - I was recently asked to write a paper on the London rental market. The banks are now very interested in focusing their attention to this part of the market. There is real talk now with asset managers as to whether repo properties are to be released back onto the market to recover what they can or to be held back and let back to the former mortgage occupier. The scales are favouring the second option. So what we will get is not a greedy landlord held in place at the expense of the saver but a greedy Banking landlord propped up by the tax payer. Political time bomb this will be. It may also mean that the market will hold up that bit longer. Who knows?

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So what we will get is not a greedy landlord held in place at the expense of the saver but a greedy Banking landlord propped up by the tax payer.

 

 

What an utterly hideous concept, so given the current UK political mindset that means it's almost guaranteed to happen.

 

'Despair' seems the only appropriate word.

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Well like i said before in the thread Cottons next auction in Birmingham 25% of the entries are repo's. This is an unpreceded amount, remember these have been marketed with agents for a period with no takers and are now being dropped at auction at most likely big loses to the banks.

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If you throw oil into the equation, surely your timescale must be 50 years, not the next year or two?

 

What would the nature of the shock that you foresee be?

Maybe something like this?

 

''Jeremy Leggett, convenor of the UK Industry Taskforce on Peak Oil and Energy Security, said: "We are asleep at the wheel here: choosing to ignore a threat to the global economy that is quite as bad as the credit crunch, quite possibly worse."

 

 

 

http://www.guardian.co.uk/business/2011/fe...tated-wikileaks

 

 

WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on prices

 

US diplomat convinced by Saudi expert that reserves of world's biggest oil exporter have been overstated by nearly 40%

 

• Peak oil alarm revealed by secret official talks

• Datablog: Are we running out of oil?

 

*

o

o Share9769

o Reddit

o Buzz up

 

* John Vidal, environment editor

* guardian.co.uk, Tuesday 8 February 2011 22.00 GMT

* Article history

 

Aerial View of Oil Refinery Saudi oil refinery. WikiLeaks cables suggest the amount of oil that can be retrieved has been overestimated. Photograph: George Steinmetz/Corbis

 

The US fears that Saudi Arabia, the world's largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.

 

The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom's crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%.

 

The revelation comes as the oil price has soared in recent weeks to more than $100 a barrel on global demand and tensions in the Middle East. Many analysts expect that the Saudis and their Opec cartel partners would pump more oil if rising prices threatened to choke off demand.

 

However, Sadad al-Husseini, a geologist and former head of exploration at the Saudi oil monopoly Aramco, met the US consul general in Riyadh in November 2007 and told the US diplomat that Aramco's 12.5m barrel-a-day capacity needed to keep a lid on prices could not be reached.

 

According to the cables, which date between 2007-09, Husseini said Saudi Arabia might reach an output of 12m barrels a day in 10 years but before then – possibly as early as 2012 – global oil production would have hit its highest point. This crunch point is known as "peak oil".

 

Husseini said that at that point Aramco would not be able to stop the rise of global oil prices because the Saudi energy industry had overstated its recoverable reserves to spur foreign investment. He argued that Aramco had badly underestimated the time needed to bring new oil on tap.

 

One cable said: "According to al-Husseini, the crux of the issue is twofold. First, it is possible that Saudi reserves are not as bountiful as sometimes described, and the timeline for their production not as unrestrained as Aramco and energy optimists would like to portray."

 

It went on: "In a presentation, Abdallah al-Saif, current Aramco senior vice-president for exploration, reported that Aramco has 716bn barrels of total reserves, of which 51% are recoverable, and that in 20 years Aramco will have 900bn barrels of reserves.

 

"Al-Husseini disagrees with this analysis, believing Aramco's reserves are overstated by as much as 300bn barrels. In his view once 50% of original proven reserves has been reached … a steady output in decline will ensue and no amount of effort will be able to stop it. He believes that what will result is a plateau in total output that will last approximately 15 years followed by decreasing output."

 

The US consul then told Washington: "While al-Husseini fundamentally contradicts the Aramco company line, he is no doomsday theorist. His pedigree, experience and outlook demand that his predictions be thoughtfully considered."

 

Seven months later, the US embassy in Riyadh went further in two more cables. "Our mission now questions how much the Saudis can now substantively influence the crude markets over the long term. Clearly they can drive prices up, but we question whether they any longer have the power to drive prices down for a prolonged period."

 

A fourth cable, in October 2009, claimed that escalating electricity demand by Saudi Arabia may further constrain Saudi oil exports. "Demand [for electricity] is expected to grow 10% a year over the next decade as a result of population and economic growth. As a result it will need to double its generation capacity to 68,000MW in 2018," it said.

 

It also reported major project delays and accidents as "evidence that the Saudi Aramco is having to run harder to stay in place – to replace the decline in existing production." While fears of premature "peak oil" and Saudi production problems had been expressed before, no US official has come close to saying this in public.

 

In the last two years, other senior energy analysts have backed Husseini. Fatih Birol, chief economist to the International Energy Agency, told the Guardian last year that conventional crude output could plateau in 2020, a development that was "not good news" for a world still heavily dependent on petroleum.

 

Jeremy Leggett, convenor of the UK Industry Taskforce on Peak Oil and Energy Security, said: "We are asleep at the wheel here: choosing to ignore a threat to the global economy that is quite as bad as the credit crunch, quite possibly worse."

 

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Governments attempting to keep prices at boom levels is characteristic of economic bubbles.

 

First an asset class, perhaps houses or stocks, tulips or bags of sand, has its price bid up by moneylenders. As the price of the asset increses more and more people invest their wealth in that asset. They see huge returns and congratulate themselves for being such clever fellows, having forseen the increased demand for tulips.

 

But after a time reality begins to assert itself. People begin to realise that paying two years salary for a tulip bulb or a million dollars for a one bedroom flat or a hundred thousand euros for a bag of sand is rather a lot. They decide to sell and prices begin to fall.

 

The trouble is that, by this time, a great portion of the economy has become dependant on the rising price of that asset. So many people need a bag of sand to sell for the same price as a house in the country that if there price fell the country would face ruin. It would be a calamity. So the government comes in to bail out banks and prop up prices.

 

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Goldfinger - I was recently asked to write a paper on the London rental market. The banks are now very interested in focusing their attention to this part of the market. There is real talk now with asset managers as to whether repo properties are to be released back onto the market to recover what they can or to be held back and let back to the former mortgage occupier. The scales are favouring the second option. So what we will get is not a greedy landlord held in place at the expense of the saver but a greedy Banking landlord propped up by the tax payer. Political time bomb this will be. It may also mean that the market will hold up that bit longer. Who knows?

 

This is just the logical extension of what is already going on.

 

It seems few people are willing to face the simple fact that if the housing market crashes and there are mass repossessions - the BANKING SYSTEM WILL GO DOWN WITH IT.

 

Set against a backdrop of having to improve their capital positions, what can banks do? Answer: exactly what they are doing now. Demanding higher deposits, being fussy who they lend to and building in (at last) some breathing space that will allow prices to correct - a little.

 

Repossessions - unless there is a lot of equity and the bank will definitely get their money back - will be avoided like the plague.

 

Banks becoming long term landlords - until the market eventually recovers and allows them to sell and get their money back - is completely and utterly predictable and inevitable. Why the shock horror? What would you do if you owned 10 houses with 90% mortgages and the market fell and you had to sell one of them at a loss - which would force a margin call on the other 9? Answer: you'd do whatever it took to avoid selling.

 

Government bail outs.

Restricted lending.

Avoidance of repossession.

Banks becoming landlords.

 

What else did you expect? A 50% property crash and the collapse of our banking system? If you expected this, you must believe in fairies.

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Maybe something like this?

 

''Jeremy Leggett, convenor of the UK Industry Taskforce on Peak Oil and Energy Security, said: "We are asleep at the wheel here: choosing to ignore a threat to the global economy that is quite as bad as the credit crunch, quite possibly worse."

 

 

 

http://www.guardian.co.uk/business/2011/fe...tated-wikileaks

 

 

WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on prices

 

US diplomat convinced by Saudi expert that reserves of world's biggest oil exporter have been overstated by nearly 40%

 

• Peak oil alarm revealed by secret official talks

• Datablog: Are we running out of oil?

 

*

o

o Share9769

o Reddit

o Buzz up

 

* John Vidal, environment editor

* guardian.co.uk, Tuesday 8 February 2011 22.00 GMT

* Article history

 

Aerial View of Oil Refinery Saudi oil refinery. WikiLeaks cables suggest the amount of oil that can be retrieved has been overestimated. Photograph: George Steinmetz/Corbis

 

The US fears that Saudi Arabia, the world's largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.

 

The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom's crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%.

 

The revelation comes as the oil price has soared in recent weeks to more than $100 a barrel on global demand and tensions in the Middle East. Many analysts expect that the Saudis and their Opec cartel partners would pump more oil if rising prices threatened to choke off demand.

 

However, Sadad al-Husseini, a geologist and former head of exploration at the Saudi oil monopoly Aramco, met the US consul general in Riyadh in November 2007 and told the US diplomat that Aramco's 12.5m barrel-a-day capacity needed to keep a lid on prices could not be reached.

 

According to the cables, which date between 2007-09, Husseini said Saudi Arabia might reach an output of 12m barrels a day in 10 years but before then – possibly as early as 2012 – global oil production would have hit its highest point. This crunch point is known as "peak oil".

 

Husseini said that at that point Aramco would not be able to stop the rise of global oil prices because the Saudi energy industry had overstated its recoverable reserves to spur foreign investment. He argued that Aramco had badly underestimated the time needed to bring new oil on tap.

 

One cable said: "According to al-Husseini, the crux of the issue is twofold. First, it is possible that Saudi reserves are not as bountiful as sometimes described, and the timeline for their production not as unrestrained as Aramco and energy optimists would like to portray."

 

It went on: "In a presentation, Abdallah al-Saif, current Aramco senior vice-president for exploration, reported that Aramco has 716bn barrels of total reserves, of which 51% are recoverable, and that in 20 years Aramco will have 900bn barrels of reserves.

 

"Al-Husseini disagrees with this analysis, believing Aramco's reserves are overstated by as much as 300bn barrels. In his view once 50% of original proven reserves has been reached … a steady output in decline will ensue and no amount of effort will be able to stop it. He believes that what will result is a plateau in total output that will last approximately 15 years followed by decreasing output."

 

The US consul then told Washington: "While al-Husseini fundamentally contradicts the Aramco company line, he is no doomsday theorist. His pedigree, experience and outlook demand that his predictions be thoughtfully considered."

 

Seven months later, the US embassy in Riyadh went further in two more cables. "Our mission now questions how much the Saudis can now substantively influence the crude markets over the long term. Clearly they can drive prices up, but we question whether they any longer have the power to drive prices down for a prolonged period."

 

A fourth cable, in October 2009, claimed that escalating electricity demand by Saudi Arabia may further constrain Saudi oil exports. "Demand [for electricity] is expected to grow 10% a year over the next decade as a result of population and economic growth. As a result it will need to double its generation capacity to 68,000MW in 2018," it said.

 

It also reported major project delays and accidents as "evidence that the Saudi Aramco is having to run harder to stay in place – to replace the decline in existing production." While fears of premature "peak oil" and Saudi production problems had been expressed before, no US official has come close to saying this in public.

 

In the last two years, other senior energy analysts have backed Husseini. Fatih Birol, chief economist to the International Energy Agency, told the Guardian last year that conventional crude output could plateau in 2020, a development that was "not good news" for a world still heavily dependent on petroleum.

 

Jeremy Leggett, convenor of the UK Industry Taskforce on Peak Oil and Energy Security, said: "We are asleep at the wheel here: choosing to ignore a threat to the global economy that is quite as bad as the credit crunch, quite possibly worse."

 

And yet I read at the weekend there is 20 years worth of North Sea Oil still waiting to be retrieved. It's in deep water and it's going to cost a lot of money to get at but, of course, the vast majority of the price of oil in this country is tax. Inevitably the government is going to have to bring in some sort of balancing tool so that as the oil price goes up the tax percentage drops and vice versa - to keep tax revenues roughly the same.

 

I can't see peak oil being the trigger. And, even it is, or some other catastrophe occurs - who will this benefit?

 

The idea that house prices can fall 50% and all the people currently priced out can swoop in and buy at sensible prices is becoming more laughable by the day. I'd love to see it happen - to give my children a chance of a life not spent in debt to banksters or scum landlords - but it isn't going to happen. If it does - we'll all have a lot more to worry about than house prices.

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Why will the banking system collapse?

 

It would just involve a transfer of ownership to the tax payers

 

Okay so we end up with one giant nationalised bank that is bankrupt - that has loans of (say) £2 trillion backed by assets worth £1 trillion. Whichever way you look at it, a banking system running under the Basle rules cannot exist.

 

Why do you think NatWest and Lloyds were bailed out? Why do you think the BOE provided a safe haven for 'troubled assets'?

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Okay so we end up with one giant nationalised bank that is bankrupt - that has loans of (say) £2 trillion backed by assets worth £1 trillion. Whichever way you look at it, a banking system running under the Basle rules cannot exist.

 

Why do you think NatWest and Lloyds were bailed out? Why do you think the BOE provided a safe haven for 'troubled assets'?

 

 

The nationalised banks would be recapitalised according to tried and tested principals

 

Banks were bailed out because nobody other than the government would lend to them.

 

The BOE is lender of last resort to enable banks to trade out of difficulty or enable orderly transition of ownership

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The nationalised banks would be recapitalised according to tried and tested principals

 

Banks were bailed out because nobody other than the government would lend to them.

 

The BOE is lender of last resort to enable banks to trade out of difficulty or enable orderly transition of ownership

 

Where would the government get the money from to recapitalise the whole banking system? I don't think you grasp the scale of the problem. This is not one bank that is in trouble that needs the BOE to step in as the lender of last resort.

 

In 2008 we were half an hour away from the cash machine network being closed down. This is a crisis - not a blip.

 

If house prices fell by 50% - the whole things going down the pan.

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Where would the government get the money from to recapitalise the whole banking system? I don't think you grasp the scale of the problem. This is not one bank that is in trouble that needs the BOE to step in as the lender of last resort.

 

In 2008 we were half an hour away from the cash machine network being closed down. This is a crisis - not a blip.

 

If house prices fell by 50% - the whole things going down the pan.

 

I dont think you can be serious.

 

The government cannot be short of money to lend to nationalised banks in a deflationary crisis.

 

2008 was a bank run. There cannot be a shortage of government cheques to satisfy all depositors.

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... The idea that house prices can fall 50% and all the people currently priced out can swoop in and buy at sensible prices is becoming more laughable by the day. I'd love to see it happen - to give my children a chance of a life not spent in debt to banksters or scum landlords - but it isn't going to happen. ...

Affordibility will always fluctuate, and so will real prices. If interest rates go up from here, there is a good chance that house prices drop considerably in nominal terms. If not, inflation will do it.

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Where would the government get the money from to recapitalise the whole banking system? I don't think you grasp the scale of the problem. This is not one bank that is in trouble that needs the BOE to step in as the lender of last resort.

 

In 2008 we were half an hour away from the cash machine network being closed down. This is a crisis - not a blip.

 

If house prices fell by 50% - the whole things going down the pan.

 

 

Ahh, the ultimate fallacy of the banking crisis - that if nothing had been done Britain would have ceased to function as a nation and somehow just sunk into the sea.

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